Latest Medicare fraud allegations just an appetizer

As we've been predicting here for some time, allegations of mismanaged therapy care are starting to land nursing homes in some seriously hot water.

Earlier this week, the CBS This Morning show took aim at Life Care Centers of America.

A scathing report alleges that one of the nation's largest nursing home operators systematically overcharged for therapy services.

The report serves up this damaging quote against the firm by Helen Toomey, a former assistant manager and speech therapist at a facility in Plymouth, MA: "They felt that no one was watching them and so every patient that came through the building they could charge the highest rate of reimbursement, regardless of their diagnosis or need."

It should be noted that Life Care strongly refuted her allegations and “will vigorously defend its therapy programs.”

It should also be pointed out that we live in a nation that assumes those accused of any misdeed are presumed innocent until found guilty.

But as this story shows, it doesn't take much for any operator — regardless of reputation or actual practices — to find itself on the business end of unflattering therapy-related accusations.

Many providers have essentially given this relatively new service to contract therapy firms, and turned a blind eye while billings continued to escalate. But here's the rub: Surveyors are not going to issue citations against third-party subcontractors. If they find something that looks wrong, they are going to go after the people running communities. And bad surveys might be the least of it. As this story shows, the FBI and the Justice Department tend to become very interested in these kinds of developments.

This is probably a very good time to take stock of what's happening in the therapy department. If you are taking care of these services on your own, you need to make sure that the care you are delivering is warranted and well documented. If you are working with an outside therapy services firm, the same is true. And if you are incentivizing employees or business partners to maximize Medicare billings, you might want to eliminate that practice ASAP.

It's a fairly safe bet that the Centers for Medicare & Medicaid Services will be changing reimbursement rules so that operators are rewarded for delivering appropriate care rather than the most care possible.

As for operators that opt to keep taking their chances in the meantime, I won't predict how badly things might turn out. Just keep watching the news.